Etsy plans to reduce its workforce by 12%, impacting 220 jobs, despite reporting strong quarterly results and raising its full-year outlook.
Etsy has announced a significant workforce reduction, laying off approximately 220 employees, which equates to about 12% of its total staff. This decision comes on the heels of the company reporting stronger-than-expected second-quarter results and raising its full-year revenue outlook.
The layoffs will primarily affect the product and engineering teams, as detailed in a filing with the U.S. Securities and Exchange Commission. Chief Executive Kruti Patel Goyal, who assumed her role earlier this year, emphasized that the restructuring aims to streamline operations and enhance decision-making processes, rather than merely cutting costs.
In an internal memo to employees, Goyal stated, “Cost savings are a consequence of these changes, but they are not the objective.” She clarified that the layoffs were not influenced by advancements in artificial intelligence, although AI will continue to play a role in how Etsy develops its products and enhances its marketplace.
Following the restructuring, Etsy is expected to have around 1,600 employees by the end of the third quarter. Affected workers will receive a severance package that includes at least 16 weeks of pay, additional compensation based on tenure, healthcare coverage for up to a year, and other transition benefits.
This announcement coincided with Etsy’s second-quarter earnings report, which surpassed Wall Street expectations. The company reported a revenue of $668.3 million, exceeding analysts’ forecasts, while sales on Etsy’s core marketplace rose by 9.3% compared to the same period last year. Additionally, Etsy raised its full-year gross merchandise sales outlook to a mid-single-digit percentage range, up from its previous low-single-digit growth forecast.
Despite these positive financial results, Etsy faces significant competition from major players such as Amazon, Walmart, TikTok Shop, and Temu, all of which have expanded their e-commerce offerings in recent months. Goyal noted that while the initial focus was on restoring growth, the next goal is to build an organization that supports Etsy’s future expansion.
The restructuring is part of a broader strategy to sharpen Etsy’s focus on its core marketplace. Last month, the company completed the sale of its secondhand fashion platform, Depop, to eBay for $1.4 billion, further streamlining its portfolio.
In a show of confidence in its long-term prospects, Etsy also announced an additional $2 billion share repurchase program. The company anticipates that third-quarter gross merchandise sales will range between $2.53 billion and $2.58 billion, indicating continued momentum in its core business.
Following the announcement of the layoffs, investors reacted cautiously, leading to a slight decline in Etsy’s shares during after-hours trading.
According to The American Bazaar, the company is navigating a challenging landscape while attempting to position itself for future growth.